Daily Intraday Volatility: Low (VIX is in the basement again at 12.09)

Comment: The market (SPX) hardly moved in the last week, ending the week close to where it started. Volume was extremely low, which tells me most investors are taking a “wait and see” approach.

The indexes are near their all-time highs, volume is low, volatility is extremely low, the market is overbought, and we’re close to the longest bull market in history. In addition, investors are starting to get bullish again (they always do at tops), which is a danger sign. I spoke to a few investors who believe the market is nearly invincible (and if it does plunge in the near future, it will “come back,” they say.)

Since I’m not in the prediction business, I can’t tell you what the market is going to do this week. But I can tell you that the danger signs are getting stronger. For now, with the market near its all time highs, we need to see if the bulls can blast through SPX 2900 and stay above. If it can, then SPX 3000 is within reach.

However, if the market fails to rise much higher than SPX 2900, I would not be surprised to see a substantial pullback. For now, however, it’s wise to “sit and wait” along with everyone else until the market makes up its mind which direction it wants to go.

Bottom line: This is the time to be patient and watch the clues, the trend, and your favorite indicators. Keep in mind these are very unusual times so be prepared for the unexpected. Some old-timers told me they have never seen a market this complacent.

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